Hello and thank you for using Just Answer,First you will need to get a new EIN for the partnership. The S corp was paying a salary before but partners do not receive salaries as they are not considered employees. Partners are taxed on their net income (gross sales income minus any allowable business expenses).

Robin D :

This net income is then divided among the partners and is taxed on each partner's tax return. Partners who perform services through the partnership are self-employed

Robin D :

S-corporations divide their net income among their shareholders, and the income is taxed on each shareholder's personal tax return at ordinary tax rates.

Customer: Ok I understand the concept between the tax treatment of the two different types of pass through entities; but I guess my question is this: My client is one of several partners that may or may not be an individual. Additionally; some partners will participate less and have varying ownership percentages across profits and losses. One of the intentions of the group is to keep the EIN already in place for billing purposes with insurances and licensures within the medical field.

Robin D :

Generally, businesses need a new EIN when their ownership or structure has changed. If the S corp stayed but new members added that woudl not require a new EIN.

Customer: So is this possible to accomplish? To file a final 2013 S-Corp tax return and start a new partnership as of Jan 1 2014 with the same EIN?

Robin D :

Youwill berequired to obtain a new EIN if you change to a partnership or even to a sole proprietorship.

Customer: Ok this is what I thought as well. Thank you for your advice.

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

Ask a Tax Professional

Get a Professional Answer. 100% Satisfaction Guaranteed.

103 Tax Professionals are Online Now

Type Your Tax Question Here...

characters left:

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.